Enterprise Resource Planning
Enterprise resource planning software, or ERP, doesnâ€™t live up to its acronym. Forget about planningâ€”it doesnâ€™t do much of thatâ€”and forget about resource, a throwaway term. But remember the enterprise part. This is ERPâ€™s true ambition. It attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departmentsâ€™ particular needs.
That is a tall order, building a single software program that serves the needs of people in finance as well as it does the people in human resources and in the warehouse. Each of those departments typically has its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other.
That integrated approach can have a tremendous payback if companies install the software correctly.
Take a customer order, for example. Typically, when a customer places an order, that order begins a mostly paper-based journey from in-basket to in-basket around the company, often being keyed and rekeyed into different departmentsâ€™ computer systems along the way. All that lounging around in in-baskets causes delays and lost orders, and all the keying into different computer systems invites errors. Meanwhile, no one in the company truly knows what the status of the order is at any given point because there is no way for the finance department, for example, to get into the warehouseâ€™s computer system to see whether the item has been shipped. "Youâ€™ll have to call the warehouse" is the familiar refrain heard by frustrated customers.
How can ERP improve a company's business performance?
ERPâ€™s best hope for demonstrating value is as a sort of battering ram for improving the way your company takes a customer order and processes it into an invoice and revenueâ€”otherwise known as the order fulfillment process. That is why ERP is often referred to as back-office software. It doesnâ€™t handle the up-front selling process (although most ERP vendors have developed CRM software or acquired pure-play CRM providers that can do this); rather, ERP takes a customer order and provides a software road map for automating the different steps along the path to fulfilling it. When a customer service representative enters a customer order into an ERP system, he has all the information necessary to complete the order (the customerâ€™s credit rating and order history from the finance module, the companyâ€™s inventory levels from the warehouse module and the shipping dockâ€™s trucking schedule from the logistics module, for example).
People in these different departments all see the same information and can update it. When one department finishes with the order it is automatically routed via the ERP system to the next department. To find out where the order is at any point, you need only log in to the ERP system and track it down. With luck, the order process moves like a bolt of lightning through the organization, and customers get their orders faster and with fewer errors than before. ERP can apply that same magic to the other major business processes, such as employee benefits or financial reporting.
ERP Software Modules
ERP software typically consists of multiple enterprise software modules that are individually purchased, based on what best meets the specific needs and technical capabilities of the organization. Each ERP module is focused on one area of business processes, such as product development or marketing. A business scan use ERP software to manage back-office activities and tasks including the following:
Distribution process management, supply chain management, services knowledge base, configure, prices, improve accuracy of financial data, facilitate better project planning, automate employee life-cycle, standardize critical business procedures, reduce redundant tasks, assess business needs, accounting and financial applications, lower purchasing costs, manage human resources and payroll.
Some of the most common ERP modules include those for product planning, material purchasing, inventory control, distribution, accounting, marketing, finance and HR.
As the ERP methodology has become more popular, software applications have emerged to help business managers implement ERP into other business activities and may also incorporate modules for CRM and business intelligence and present them as a single unified package.
The basic goal is to provide one central repository for all information that is shared by all the various ERP facets in order to smooth the flow of data across the organization.
Depending on your organization's size and needs there are a number of enterprise resource planning software vendors to choose from in the large enterprise, mid-market and the small business ERP market.
Large Enterprise ERP (ERP Tier I)
The ERP market for large enterprises is dominated by three companies: SAP, Oracle and Microsoft. EnterpriseAppsToday; Enterprise ERP Buyer's Guide: SAP, Oracle and Microsoft; Drew Robb)
Mid Market ERP (ERP Tier II)
For the midmarket vendors include Infor, QAD, Lawson, Epicor, Sage and IFS.EnterpriseAppsToday>; Midmarket ERP Buyer's Guide; Drew Robb)
Small Business ERP (ERP Tier III)
Exact Globe, Syspro, NetSuite, Visibility, Consona, CDC Software and Activant Solutions round out the ERP vendors for small businesses.EnterpriseAppsToday; ERP Buyer's Guide for Small Businesses; Drew Robb)
Types Of Enterprise Applications
- automated billing systems
- payment processing
- email marketing systems
- content management
- call center and customer support
- Customer Relationship Management (CRM)
- Enterprise Resource Planning (ERP)
- Business Intelligence
- Business Continuity Planning (BCP)
- HR Management
- Enterprise Application Integration (EAI)
- enterprise search
- messaging and collaboration systems.
Benefits of Two-tier ERP
Two-tier ERP enables an organization to optimize regional back office processes at a site that operates under a business model that is separate from the main company. At some locations the ERP requires special considerations â€” including translations or regionalized business models â€” and organizations my look to maintain a legacy ERP at headquarters with two-tier ERP solutions to support specific needs at the subsidiary level that fully integrates with the corporate system.
Survey Analysis: Customers Rate Their BI Platform Functionality
Master data management is one of the biggest concerns for organizations deploying two tiers of ERP. There should be no duplication of effort between the two ERP systems. Consistency is required at the second tier to ensure the corporate first-tier ERP achieves a single source of information for financials, orders and other business.